New Financial Support for Businesses – States-Backed Loan Guarantee Scheme

The States of Guernsey has finalised a loan guarantee scheme to enable further financial support for Bailiwick businesses.

The scheme will enable trading businesses to obtain support in the form of a loan from one of the clearing banks which will be backed by the States of Guernsey up to 80% of the loan. The scheme is operated by the clearing banks – Barclays, HSBC, Lloyds and RBSI/NatWest.

The aim of the scheme is to enable additional liquidity support to be made available to Bailiwick businesses.

The principles of the scheme are as follows:

  1. The Scheme only applies to trading businesses. Businesses regulated by the Guernsey Financial Services Commission and property investment and development businesses are excluded. This is subject to a maximum turnover of £10 million.
  2. The Scheme only applies in respect of new lending and not any existing debt issued by the banks, including the cancellation of one form of lending and its replacement with another.
  3. The States Guarantee will apply in respect of 80% of the total amount provided by the banks.
  4. The loans and overdrafts will be for between £5,000 and £500,000.
  5. The Scheme will remain open until the 31st  December 2020.
  6. The government guarantee will remain valid for a total of 8 years, this is made up of a
    term of 6 years, with an additional 18 months to allow the banks to effect recovery and a
    further 6 months for the bank to effect a claim against the States’ Guarantee if necessary.
  7. An individual’s principle primary residence cannot be provided as security to a bank in
    respect of the Scheme.
  8. The  banks  may  lend  up  to  £250,000  without  seeking  any  form  of  security  from  the
  9. The banks have a reporting requirement to government in respect of the number of loans
    issued and the amount and in respect of applications received but declined.

The scheme will be launched later this week. Businesses interested in taking advantage of this scheme are to contact one of the clearing banks for more information. More information is available here.

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